How much life insurance do you need?

How much life insurance do you need?
Sadly, almost nobody has as much life insurance as they think they have.

Many people insure their lives for &190.000 because it sounds like a lot of money - and it is.

But is it enough for surviving dependants to live off? Can it pay off all your mortgages, loans and credit cards and still leave a big enough sum to generate an income?

People hugely miscalculate the rate at which a family can get an income from a lump sum. At current levels, without risking the capital, the $190.000 may pay a maximum annual income of $8.000.

To calculate the amount of cover you need, a budgeting exercise should throw up the amount of money a household requires to maintain its standard of living for a year.

Take that figure and multiply it by a factor of 25, which allows for the tax youíll pay on the income, and thatís how much of a lump sum you need a policy to pay out for your dependants to continue living their current lifestyle for 15 to 20 years.